The following is an exclusive translation from Novye Izvestiya. Aren’t you a lucky reader…
The tail wags the dog
Judging by everything, Russia has refused to sign the Energy Charter because of the «YUKOS case»
IVAN MARKOV, «Novye Izvestiya»
Two weeks ago at a session of the government a decision undeservedly passed over by the attention of the mass information media was adopted about how Russia refuses to ratify the Energy Charter. This is one of the long-suffering international documents in the most recent Russian history. Our country first put its signature under this document our country in the long-ago year of 1994. So what happened, if after 15 years Russia has so harshly abandoned this document?
The Energy Charter regulates mutual relations between the countriesthat have signed it in the sphere of energy. One of the most importantquestions touched upon by this treaty is the protection of foreigninvestors. Moreover, unlike many such documents, the Energy Charterdoes not limit itself to mere general declarations on the necessity ofa reverential attitude towards foreign investments. In the Charter arespelled out in sufficient detail the mechanisms for the protection ofinvestments, including the possibility for investors to assert theirrights in international courts.
It would seem there is nothing bad in this. Both the first personsof the state and specialists in energy have declared on many occasionsabout the necessity of attracting foreign investments in thedevelopment of large-scale capital-intensive projects for theproduction of oil and gas in Eastern Siberia and offshore. It isobvious that without the participation of large transnationalcompanies, to realize the energy strategy of the country is simplyimpossible. And ratification of the Energy Charter would serve as animportant positive signal for western investors. A high degree ofprotection of capital from risks outside economic ones would increaseby several orders of magnitude the likelihood of the coming of largeforeign investments in energy as a whole and into the production of oiland gas in particular. And the additional protection would also come inhandy for domestic companies realizing a strategy of internationalexpansion.
But everything was outweighed, judging by everything, by just onesole argument. The Energy Charter is the legal foundation for a claimby former shareholders of the YUKOS company against the Russian state.Investors who have suffered from the artificial bankruptcy of theformer company of Khodorkovsky are demanding of the government ofRussia to pay them back for their losses. In its time, the market hadappraised the YUKOS company in the tens of billions of dollars.Correspondingly, the sum of the shareholders’ claims is comparable issize as well.
The budget of our country too could not withstand payouts of tens ofbillions of dollars on a claim in a period of high oil prices, not tomention the current – crisis and deficit budget. Litigation withrespect to the «YUKOS case» in an international court not under thecontrol of our powers likewise would be fraught with image losses forthe country. Therefore the majority of analysts and politicalscientists converge in the opinion that the refusal to ratify theCharter – this is an attempt to avoid litigation with YUKOSshareholders. It is possible that the attempt is unsuccessful, because,as certain jurists consider, what has significance is only that factthat the Charter had been signed by Russia at the moment of thebankruptcy of YUKOS.
But even if we succeed in avoiding the claims, then nevertheless itturns out that by this decision we are depriving the country of westerninvestments so needed now, which could well have become the locomotiveof the economy in conditions of crisis and deficit of financialresources. It turns out to be a paradoxical situation. At the beginningof the so-called «YUKOS affair» it was said that the interests of thecountry demand this. But now the consequences of the struggle with theoil company and its owners demand giving up on these interests?
It is possible that the powers would do well to be more consistent.It looks somewhat strange that the development of internationalrelations and questions of economic strategy are subordinate to thelogic not of benefit for the country or of society, but lie in thestream of resolution of superannuated conflicts. But, probably, it isnot at all the «YUKOS affair» that should be determining the policy ofthe country, or else it turns out that the tail is wagging the dog,although it should be the other way around.
© 2009, «ZAO «Gazeta Novye Izvestiya»
Illustration from Economist.
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10 Comments
At a time of an oil glut and declining prices, why does Russia need Western investment to increase production? All that will do is reduce the price of oil more.And that’s a great picture from The Economist! In February 1999, their cover showeda flabby, paunchy, threadbare Bear looking with consternation at his empty Money Pot. Now they show a steely-eyed, muscular Bear with a firm hand on the pipeline valve.That is Putin’s achievement, going from a flabby, Oligarch-ridden, bankrupt Bear to a well-dressed Bear with a future.And that’s why Russophobes in general, and The Economist in particular, hate Putin so much.
RKKA:You are a true psychopath. The price of oil rising to $150/barrel HAD ABSOLUTELY NOTHING to do with Vladimir Putin. Michael McFaul has clearly shown how Putin WASTED Russia’s oil windfall, totally failing to invest in the welfare of the population, frittering it away on paranoid cold war fantasies.What’s more, Hitler took a “weak” Germany and made it “strong.” Then what? Your gibberish is truly neo-Soviet in its dishonesty and ignorance.Russophobes hate Putin because he is destroying Russia, not because he is making it weak. And as he destroys it, he makes it a threat to worldwide security both as it lashes out in its final throes and as it collapses.
Rkka, LR above overstates her case and exaggerates in the adjectives she chooses, but she does have a point.Your basic idea is simple isolationism: why should Russia need investors?… why indeed? Why is every modern economy happy to have investments? More oil would reduce prices? It’s not so simple, not in a world in which the demand also grows as the crisis recedes (as it seems to be doing).But furthermore: investment in all other sectors of the economy, so that the little plum bear won’t again become ragged and skinny as soon as the oil prices go down… Believe me, being a monoculture economy isn’t good. Brazil did that in the 19th and early 20th century, and it didn’t turn out well for us.
Phoby, Phoby, Phony…Nazi Germany took out massive foreign loans, which they never intended to pay back, to fund rearmament for a series of wars of racial extermination, against Slavs in particular.The Russian government on the other hand has paid back practically all their foreign debts, has built up a massive financial reserve, and shows no sign whatever of planning aggressive war.And if Putin had not broken the political power of the Oligarchs, Russia’s energy windfall would have been leveraged 30-1 and entirely lost, instead of being carefully taxed away to pay those debts and build those reserves.Now, it is amusing that people who prattle endlessly about Putin’s “failure” to diversify Russia’s economy also complain about his “failure” to invest enough in Russia’s energy sector, as if it isn’t big enough…
But, rkka… If Hitler had won, you’d be here telling us how smart he was for having borrowed, having fought and won a war, destroyed all his enemies, and made Germany a powerful country. (I suppose it would be mostly the people who came after him who’d have done that — just as in the USSR case after Stalin — but still.)After all, that’s what Stalin did, right? Get rid of a number of minorities (happily not Slavs… not all of them, at least, just some; a few millons; but there are so many of them, who’s gonna notice a few missing millions?…).The Russian government does show a number of worrisome aggressive stances, including readiness to war (Georgia, the Iskanders in Kaliningrad, the little missile show in Ukraine…)Also, the problem is, Putin didn’t break the power of the oligarchs; he just chose which oligarchs he wanted to have there (and presumably became one himself — what’s his personal wealth again? How much goes from Gazprom and Sberbank to his pockets?). The money not placed in reserves has been misspent (mostly via corruption, highly overpriced infrastructure — ‘the most costly roads in Europe, the highest price per km ever’ — etc.) and next to nothing has been done to decrease Russia’s dependency on oil, other than little PR shows like Russnano.Last (but not least), it’s not funny to mention that Putin both failed to diversify and to invest in the energy sector. Both are true. Why should it be funny?…
If Hitler had won… Get real.As for your Hitler/Stalin equivalence… that actually reflects progress, because prior to 23 August 1939 Western governments liked Hitler better than Stalin. And give Stalin credit for preventing the completion of GeneralPlan Ost.Putin indeed broke the political power of the oligarchs, in order to make them submit to taxation. Under that drunken incompetent comprador buffoon Yeltsin the oligarchs would have had every Ruble Putin took from them, and would have squandered them.And someone who says Putin failed to invest in the energy sector must have an interesting explanation for how Russia’s oil production grew from 7.7 mbpd in 2003 to 9.5 mbpd in 2008. Personally I think this was a mistake. The money infested in the oil sector at that time would have been better invested in diversification.
And as for alleged Russian aggressive stances, all I can say is that many Russophobes still parrot Herr Goebbel’s line that Operation Barbarossa was defensive. It is only to be expected that Russophobes will say the same thing about Saak’s attack on Russian peacekeepers.
Hitler could have won. Don’t ignore the obvious.Prior to 1939, Western states had very good reasons to like Hitler more than Stalin. Stalin had already killed 8-10 million people, and he represented a crazy ideology that had promised to start anti-capitalist revolutions worldwide. Hitler hadn’t. If you were the leader of a Western power, who would you consider more unfriendly?… Remember: you don’t know future history in 1939.I give Stalin credit for winning the war. And I would have given Hitler credit for winning the war if he had. This doesn’t change the fact that both were tyrant psychopaths that should have been shot at birth.Putin keeps giving privileges (even concerning taxation) to any oligarchs he likes. How is that breaking their power? It’s more like becoming their big boss. Yes, he dominates them now — they can’t get him. As for the rest of the country, if the boss allows, they will. Just ask Deripaska.Again, I wonder if Yeltsin being a buffoon isn’t a reflex of the oil price. What would Yeltsin have looked like with $150 a barrel? And what would Putin have looked like with $25? Very good question. My guess: very different from what they looked in actual history.Indeed, I agree that money would be better spent in diversification. I hope someone will tell that to the Kremlin.I don’t see a single Russophobe who repeats Goebbels’ line — would you care to give me a link? That’s a Russophobe who needs some lessons in history.That, of course, does not in the least change any of the aggressive stances of the Russian government (the latest one being Medvedev’s anti-Yushchenko vlog stunt, presumably because they didn’t let him parade his missiles in Crimea). Ah, the same government who keeps complaining about poor Russophones in Ukraine but who won’t lift a finger to give Ukraininan-language schools to the Ukrainians in the Russian federation (about 3 million strong still).
And as for Russia’s aggressive stance in Georgia and anti-Georgian PR campaigns: what Saakashvili attacks on Russian piece-keepers are you talking about? The OCSE observers were unable to confirm them, and you’d imagine that mortar fire would be hard to conceal. It makes a lot of noise. Also, Russia sent all foreign observers in the occupied regions away, remember? So now, these attacks occur only in Russian TV. Like Spielberg’s special effects.If there are real attacks, please let me know — I certainly think Saakashvili is capable of resorting to such tactics; he’s as bad as Putin. But the attacks have to be real, to really happen — or else, it’s all propaganda.
“Hitler could have won. Don’t ignore the obvious.”It is not at all obvious how a European Axis with ten capital ships, no aircraft carriers, and access to a grand total of 2% of the world’s natural oil defeats the two greatest maritime powers in the world.”Prior to 1939, Western states had very good reasons to like Hitler more than Stalin.”So you agree with British Prime Minister Neville Chamberlain’s concept of “Germany and England as two pillars of European peace and buttresses against Communism”?”Remember: you don’t know future history in 1939.”Adolph had made his agenda clear in the mid-1920s.”What would Yeltsin have looked like with $150 a barrel?”Even more drunk.”And what would Putin have looked like with $25? “The average world price of oil did not exceed $25 until 2003. Putin was doing fine then.”I don’t see a single Russophobe who repeats Goebbels’ line — would you care to give me a link?”Why, this very blog wrote up a conference on the idea some months back, with Satter and Piontkowsky speaking. Both are repeatedly referenced by this very blog as experts on Russia.”And as for Russia’s aggressive stance in Georgia and anti-Georgian PR campaigns: what Saakashvili attacks on Russian piece-keepers are you talking about? The OCSE observers were unable to confirm them, and you’d imagine that mortar fire would be hard to conceal.”Um, the multiple rocket launcher salvos launched by the Georgian Army vicinity Tsinkvale on 7 August 2008.